Definition of Daily Interest Accumulation

Daily Interest Accumulation

Account in which interest is accrued daily and credited to the account at the end of a specified time.

Compound Interest

interest earned on an investment at periodic intervals and added to principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of principal and previous interest earned. Essentially, interest is paid on top of interest.

Insurable Interest

In England in the 1700's it was popular to bet on the date of death of certain prominent public figures. Anyone could buy life insurance on another's life, even without their consent. Unfortunately, some died before it was their time, dispatched prematurely in order that the life insurance proceeds could be collected. In 1774, English Parliament passed a law which restricted the right to be a beneficiary on a life insurance contract to those who would suffer an economic loss when the life insured died. The law also provided that a person has an unlimited insurable interest in his own life. It is still a legal stipulation that an insurance contract is not valid unless insurable interest exists at the time the policy is issued. Life Insurance companies will not, however, issue unlimited amounts of coverage to an individual. The amount of life insurance which will be approved has to approximate the loss caused by the death of the individual and must not result in a windfall for the beneficiary.

Guaranteed Interest Annuity (GIA)

interest bearing investment with fixed rate and term.

Guaranteed Interest Certificate (GIC)

interest bearing investment with fixed rate and term.

Interest Option

One of several investment accounts in which your premiums may be invested within your life insurance policy.

Interest Rate

Rate charged or paid for the use of money, normally expressed as a percentage

Interest Rate Differential Amount (IRD)

An IRD amount is a compensation charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is calculated on the amount being prepaid using an interest rate equal to the difference between your existing mortgage interest rate and the interest rate that we can now charge when re-lending the funds for the remaining term of the mortgage. For more information, click on compensation amounts.

Accrued Income

Income that has been earned but not yet received. For instance, if you have a non-registered Guaranteed investment Certificate (GIC), Mutual Fund or Segregated Equity Fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment.

Beneficiary

This is the person who benefits from the terms of a trust, a will, an RRSP, a RRIF, a LIF, an annuity or a Life Insurance policy. In relation to RRSP's, RRIF's, LIF's, Annuities and of course Life Insurance, if the beneficiary is a spouse, parent, offspring or grand-child, they are considered to be a preferred beneficiary. If the insured has named a preferred beneficiary, the death benefit is invariably protected from creditors. There have been some court challenges of this right of protection but so far they have been unsuccessful. See "Creditor Protection" below. A beneficiary under the age of 18 must be represented by an individual guardian over the age of 18 or a public official who represents minors generally. A policy owner may, in the designation of a beneficiary, appoint someone to act as trustee for a minor. death benefits are not subject to income taxes. If you make your beneficiary your estate, the death benefit will be included in your assets for probate. Probate filing fees are currently $14 per thousand of estate value in British Columbia and $15 per thousand of estate value in Ontario.
another way to avoid probate fees or creditor claims against Life Insurance proceeds is for the insured person to designate and register with his/her Insurance company's head office an irrevocable beneficiary. By making such a designation, the insured gives up the right to make any changes to his/her policy without the consent of the irrevocable beneficiary. Because of the seriousness of the implications, an irrevocable designation should only be made for good reason and where the insured fully understands the consequences.
NoteA successful challenge of the rules relating to beneficiaries was concluded in an Ontario court in 1996. The Insurance Act says its provisions relating to beneficiaries are made "notwithstanding the Succession law Reform Act." There are two relevent provisions of the Succession law Reform Act. One section of the act gives a judge the power to make any order concerning an estate if the deceased person has failed to provide for a dependant. another section says money from a Life Insurance policy can be considered part of the estate if an order is made to support a dependant. In the case in question, the deceased had attempted to deceive his lawful dependents by making his common-law-spouse the beneficiary of an Insurance policy which by court order was supposed to name his ex-spouse and children as beneficiaries.

Buy/Sell Agreement

This is an agreement entered into by the owners of a business to define the conditions under which the Interests of Each shareholder will be bought and sold. The agreement sets the value of Each shareholders Interest and stipulates what happens when one of the owners wishes to dispose of his/her Interest during his/her Lifetime as well as disposal of Interest upon death or disability. Life Insurance, critical illness coverage and disability Insurance are major considerations to help fund this type of agreement.

Cash Surrender Value

This is the amount available to the owner of a Life Insurance policy upon voluntary termination of the policy before it becomes payable by the death of the Life insured. This does not apply to term Insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications.

Canadian Deposit Insurance Corporation

better known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds.

Co-insurance

In medical Insurance, the insured person and the insurer sometimes share the cost of services under a policy in a specified ratio, for example 80% by the insurer and 20% by the insured. By this means, the cost of coverage to the insured is reduced.

Contingent Beneficiary

This is the person designated to receive the death benefit of a Life Insurance policy if the primary beneficiary dies before the Life insured. This is a consideration when husband and wife make Each other the beneficiary of their coverage. Should they both die in the same car accident or plane crash, the death benefits would go to Each others estate and creditor claims could be made against them. Particularly if minor children could be survivors, then a trustee contingent beneficiary should be named.

Contingent Owner

This is the person designated to become the new owner of a Life Insurance policy if the original owner dies before the Life insured.

Conversion Right

Term Life Insurance products are offered as non-convertible or convertible to a certain time in the future. The coversion right has a time limit, usually to the policy holder's age 60 or possibly even age 70. This right means that the policy holder has the right to convert their existing policy to another specific different plan of permanent Insurance within the specified time period, without providing evidence of insurability. There is a slightly higher cost for a term policy with the conversion priviledge but it is a valuable feature should a policy holder's health change for the worst and continued Insurance coverage becomes a necessity.
Most often this right is also granted to individuals covered under employee group benefit policies where individuals leaving the employee group have a limited amount of time, usually anywhere from 30 to 90 days, to convert to a specific permanent individual policy without evidence of insurability.

Dead Peasants Insurance

also known as "Dead Janitors Insurance", this is the practice, where allowed, in several U.S. states, of numerous well known large American Corporations taking out corporate owned Life Insurance policies on millions of their regular employees, often without the knowledge or consent of those employees. Corporations profiting from the deaths of their employees [and sometimes ex-employees] have attracted adverse publicity because ultimate death benefits are seldom, even partially passed down to surviving families.

Disability Insurance

Insurance that pays you an ongoing income if you become disabled and are unable to pursue employment or business activities. There are limits to how much you can receive based on your pre-disability earnings. Rates will vary based on occupational duties and length of time in a particular industry. This kind of coverage has a waiting period before you can begin collecting benefits, usually 30, 60 or 90 days. The benefit paying period also varies from 2 years to age 65. A short waiting period will cost more that a longer waiting period. As well, a long benefit paying period will cost more than a short benefit paying period.

Dividend

As the term dividend relates to a corporation's earnings, a dividend is an amount paid per share from a corporation's after tax profits. Depending on the type of share, it may or may not have the right to earn any dividends and corporations may reduce or even suspend dividend payments if they are not doing well. some dividends are paid in the form of additional shares of the corporation. Dividends paid by Canadian corporations qualify for the dividend tax credit and are taxed at lower rates than other income.
As the term dividend relates to a Life Insurance policy, it means that if that policy is "participating", the policy owner is entitled to participate in an equitable distribution of the surplus earnings of the Insurance company which issued the policy. Surpluses arise primarily from three sources:
1) the difference between anticipated and actual operating expenses,
2) the difference between anticipated and actual claims experience, and
3) Interest earned on investments over and above the rate required to maintain policy reserves. Having regard to the source of the surplus, the "dividend" so paid can be considered, in part at least, as a refund of part of the premium paid by the policy owner.
Life Insurance policy owners of participating policies usually have four and sometimes five dividend options from which to choose:
1) take the dividend in cash,
2) apply the dividend to reduce current premiums,
3) leave the dividends on deposit with the Insurance company to accumulate at Interest like a savings plan,
4) use the dividends to purchase paid-up whole Life Insurance to mature at the same time as the original policy,
5) use the dividends to purchase one year term Insurance equal to the guaranteed cash value at the end of the policy year, with any portion of the dividend not required for this purpose being applied under one of the other dividend options.
NOTE: It is suggested here that if you have a participating whole Life policy and at the time of purchase received a "dividend projection" of incredible future savings, ask for a current projection. Life Insurance company's surpluses are not what they used to be.

Endowment

Life Insurance payable to the policyholder, if living on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date. For example, some Term to age 100 policies offer the option of taking the face amount of the policy as a cash payout at age 100 if the policyholder is still alive and paying all required income taxes on the amount received or leaving the policy to pay out upon death whereupon the payout is tax free.

Errors and Omissions Insurance

Insurance coverage purchased by the agent/broker which provides protection against loss incurred by a client because of some negligent act, error, oversight, or omission by the agent/broker.

First To Die Coverage

This means that there are two or more Life insured on the same policy but the death benefit is paid out on the first death only. If two or more persons at the same address are purchasing Life Insurance at the same time, it is wise to compare the cost of this kind of coverage with individual policies having a multiple policy discount.

Group Life Insurance

This is a very common form of Life Insurance which is found in employee benefit plans and bank mortgage Insurance. In employee benefit plans the form of this Insurance is usually one year renewable term Insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates.
some people rely on this kind of Insurance as their primary coverage forgetting that group Life Insurance is a condition of employment with their employer. The coverage is not portable and cannot be taken with you if you change jobs. If you have a change in health, you may not qualify for new coverage at your new place of employment.
Bank mortgage Insurance is also usually group Insurance and you can tell this by virtue of the fact that you only receive a certificate of Insurance, and not a complete policy. The only form in which bank mortgage Insurance is sold is reducing term Insurance, matching the declining mortgage balance. The only beneficiary that can be chosen for this kind of Insurance is the bank. In both cases, employee benefit plan group Insurance and bank mortgage Insurance, the coverage is not guaranteed. This means that coverage can be cancelled by the Insurance company underwriting that particular plan, if they are experiencing excessive claims.

Independent Broker

This is a provincial government licensed independent businessperson who usually represents five or more Life Insurance companies in a sales and service capacity and who is paid a commission by those Life Insurance companies for sales and service of Life Insurance products. We for example, have been in business for 12 years and regularly place new business with over twenty different Life Insurance companies.

Insured

This is the person covered by the Life Insurance policy. Upon this person's death, a tax free benefit will be paid to that person's estate or a named beneficiary.

Insured Mortgage

An insured mortgage protects only the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC [Canada Mortgage and Housing Corporation] and is required if a person has a high-ratio mortgage. [A mortgage is high-ratio if the amount borrowed is more than 75% of the purchase price or appraised value, whichever is less.]

Insured Retirement Plan

This is a recently coined phrase describing the concept of using Universal Life Insurance to tax shelter earnings which can be used to generate tax-free income in retirement. The concept has been described by some as "the most effective tax-neutralization strategy that exists in Canada today."
In addition to Life Insurance, a Universal Life policy includes a tax-sheltered cash value fund that cannot exceed the policy's face value. Deposits made into the policy are partially used to fund the Life Insurance and partially grow tax sheltered inside the policy. It should be pointed out that in order for this to work, you must make deposits into this kind of policy well in excess of the cost of the underlying Insurance. investment of the cash value inside the policy are commonly mutual fund type investments. Upon retirement, the policy owner can draw on the accumulated capital in his/her policy by using the policy as collateral for a series of demand loans at the bank. The loans are structured so the sum of money borrowed plus Interest never exceeds 75% of the accumulated investment account. The loans are only repaid with the tax free death benefit at the death of the policy holder. Any remaining funds are paid out tax free to named beneficiaries.
Recognizing the value to policy holders of this use of Universal Life Insurance, Insurance companies are reworking features of their products to allow the policy holder to ask to have the relationship of Insurance to investment growth tracked so that investment growth inside the policy may be maximized. The only potential downside of this strategy is the possibility of the government changing the tax rules to prohibit using a Life Insurance product in this manner.

Last To Die Coverage

This means that there are two or more Life insured on the same policy but the death benefit is paid out on the last person to die. The cost of this type of coverage is much less than a first to die policy and it is generally used to protect estate value for children where there might be substantial capital gains taxes due upon the death of the last parent. This kind of policy is also valuable when one of two people covered has health problems which would prohibit obtaining individual coverage.

Level Premium Life Insurance

This is a type of Insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than actual cost of protection in the earlier years of the policy and less than the actual cost of protection in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years.

Life Expectancy

The average number of years of Life remaining for a group of people of a given age and gender according to a particular mortality table.

Life Income Fund

Commonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement Income Funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder rEaches age 80.

Living Will

This is a will which specifically expresses the testator's desire not to be kept alive on Life support machines, should the occasion arise.

Mortgage Insurance

Commonly sold in the form of reducing term Life Insurance by lending institutions, this is Life Insurance with a death benefit reducing to zero over a specific period of time, usually 20 to 25 years. In most instances, the cost of coverage remains level, while the death benefit continues to decline. Re-stated, the cost of this kind of Insurance is actually increasing since less death benefit is paid as the outstanding mortgage balance decreases while the cost remains the same. Lending institutions are the most popular sources for this kind of coverage because it is usually sold during the purchase of a new mortgage. The untrained institution mortgage sales person often gives the impression that this is the only place mortgage Insurance can be purchased but it is more efficiently purchased at a lower cost and with more flexibility, directly from traditional Life Insurance companies. No matter where it is purchased, the reducing term Insurance death benefit reduces over a set period of years. Most consumers are up-sizing their residences, not down-sizing, so it is likely that more coverage is required as years pass, rather than less coverage.
The cost of mortgage lender's Insurance group coverage is based on a blended non-smoker/smoker rate, not having any advantage to either male or female. Mortgage lender's group Insurance certificate specifies that it [the lender] is the sole beneficiary entitled to receive the death benefit. Mortgage lender's group Insurance is not portable and is not guaranteed. Generally speaking, your coverage is void if you do not occupy the house for a period of time, rent the home, fall into arrears on the mortgage, and there are a few others which vary by institution. If, for example, you sell your home and buy another, your current mortgage Insurance coverage ends and you will have to qualify for new coverage when you purchase your next home. Maybe you won't be able to qualify. Not being guaranteed means that it is possible for the lending institution's group Insurance carrier to cancel all policy holder's coverages if they are experiencing too many death benefit claims.
Mortgage Insurance purchased from a Life Insurance company, is priced, based on gender, smoking status, health and Lifestyle of the purchaser. Once obtained, it is a unilateral contract in your favour, which cannot be cancelled by the Insurance company unless you say so or unless you stop paying for it. It pays upon the death of the Life insured to any "named beneficiary" you choose, tax free. If, instead of reducing term Life Insurance, you have purchased enough level or increasing Life Insurance coverage based on your projection of future need, you can buy as many new homes in the future as you want and you won't have to worry about coverage you might loose by renewing or increasing your mortgage.
It is worth mentioning mortgage creditor protection Insurance since it is many times mistakenly referred to simply as mortgage Insurance. If a home buyer has a limited amount of down payment towards a substantial home purchase price, he/she may qualify for a high ratio mortgage on a home purchase if a lump sum fee is paid for mortgage creditor protection Insurance. The only Canadian mortgage lenders currently known to offer this option through the distribution system of banks and trust companies, are General Electric Capital [GE Capital] and Central Mortgage and Housing Corporation [CMHC]. The lump sum fee is mandatory when the mortgage is more than 75% of the value of the property being purchased. The lump sum fee is usually added onto the mortgage. It's important to realize that the only beneficiary of this type of coverage is the morgage lender, which is the bank or trust company through which the buyer arranged their mortgage. If the buyer for some reason defaults on this kind of high ratio mortgage and the value of the property has dropped since being purchased, the mortgage creditor protection Insurance makes certain that the bank or trust company gets paid. however, this is not the end of the story, because whatever the difference is, between the disposition value of the property and whatever sum of unpaid mortgage money is outstanding to either GE Capital or CMHC will be the subject of collection procedures against the defaulting home buyer. Therefore, one should conclude that this kind of Insurance offers protection only to the bank or trust company and absolutely no protection to the home buyer.

Owner

This is the person who owns the Insurance policy. It is usually the same person as the insured but it could be someone else who has the permission of the insured to be the owner, like a spouse, a common-law-spouse, an offspring, a parent, a corporation with insurable Interest or a business partner with insurable Interest. In order for someone else to be an owner of your policy, they have to have a legitimate insurable Interest in you.

Policy Fee

This is an administrative fee which is part of most Life Insurance policies. It ranges from about $40 to as much as $100 per year per policy. It is not a separate fee. It is incorporated in the regular monthly, quarterly, semi-annual or annual payment that you make for your policy. Knowing about this hidden fee is important because some Insurance companies offer a policy fee discount on additional policies purchased under certain conditions. sometimes they reduce the policy fee or waive it altogether on one or more additional policies purchased at the same time and billed to the same address. The rules are slightly different depending on the Insurance company. There could be enormous savings if several people in the same family or business were intending to purchase coverage at the same time.

Policyholder

This is the person who owns a Life Insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation. There are instances in marriage breakup (or relationship breakup with dependent children) where appropriate Life Insurance on the support provider, owned and paid for by the ex-spouse receiving the support is an acceptable method of ensuring future security.

Split Dollar Life Insurance

The split dollar concept is usually associated with cash value Life Insurance where there is a death benefit and an accumulation of cash value. The basic premise is the sharing of the costs and benefits of a Life Insurance policy by two or more parties. Usually one party owns and pays for the Insurance protection and the other owns and pays for the cash accumulation. There is no single way to structure a split dollar arrangement. The possible structures are limited only by the imagination of the parties involved.

Temporary Life Insurance

Temporary Insurance coverage is available at time of application for a Life Insurance policy if certain conditions are met. Normally, temporary coverage relates to free coverage while the Insurance company which is underwriting the risk, goes through the process of deciding whether or not they will grant a contract of coverage. The qualifications for temporary coverage vary from Insurance company to Insurance company but generally applicants will qualify if they are between the ages of 18 and 65, have no knowledge or suspicions of ill health, have not been absent from work for more than 7 days within the prior 6 months because of sickness or injury and total coverage applied for from all sources does not exceed $500,000. Normally a cheque covering a minimum of one months premium is required to complete the conditions for this kind of coverage. The Insurance company applies this deposit towards the cost of a policy at its issue date, which may be several weeks in the future.

Term Life Insurance

A plan of Insurance which covers the insured for only a certain period of time and not necessarily for his or her entire Life. The policy pays a death benefit only if the insured dies during the term.

Will

This is a legal document detailing how you want your assets to be distributed upon your death. You may also stipulate how you wish to be buried or who you would like to take care of any surviving dependent family members. In my opinion, it is very important to be quite specific about your wishes for the distribution of special assets such as the antique grandfather clock, the classic silver tea set or the antique piano. If you think that your beneficiaries may dispute how your things are to be distributed, consider stipulating that an auction be held in which all beneficiaries may bid on the item which they value and all moneys collected are then shared in the same manner in which you distributed your other liquid assets. Your might want to remember that a will is automatically revoked upon marriage unless the will specifically states that the will is made in contemplation of marriage.

Yearly Renewable Term Insurance

sometimes, simply called YRT, this is a form of term Life Insurance that may be renewed annually without evidence of insurability to a stated age.

Accidental Death and Dismemberment

coverage that provides a lump-sum payment to you or your survivors if an accident results in the loss of a limb, paralysis or your death.

Accidental Death Benefit (ADB)

coverage against accidental death usually payable in addition to base amount of coverage.

Accidental Dismemberment: (Credit Insurance)

Provides additional financial security should an insured person be dismembered or lose the use of a limb as the result of an accident.

Account Value

The sum of all the Interest options in your policy, including Interest.

Amortization (Credit Insurance)

Refers to the reduction of debt by regular payments of Interest and principal in order to pay off a loan by maturity.

Beneficiary

The person designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event.

Beneficiary (Credit Insurance)

The person or party designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. In the case of credit Insurance, the beneficiary will always be the creditor.

Borrower (Credit Insurance)

A consumer who borrows money from a lender.

Canadian Life and Health Insurance Association (CLHIA)

An association of most of the Life and health Insurance companies in Canada that conducts research and compiles information about the Life and health Insurance industry in Canada.

Cash Surrender Value

Benefit that entitles a policy owner to an amount of money upon cancellation of a policy.

Child Insurance Rider (CIR)

Insurance or insurability provided on current or future children of insured.

Commercial Business Loan (Credit Insurance)

An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes.

Cost of Insurance

The cost of insuring a particular individual under the policy. It is based on the amount of coverage, as well as the underwriting class, age, sex and tobacco consumption of that individual.

Creditor (Credit Insurance)

A lender or lending institution that offers financing and loans to a borrower, for the purpose of acquiring a commodity.

Critical Illness Insurance

coverage that provides a lump-sum payment should you be diagnosed with a critical illness and survive a pre-determined period of time. There are no restrictions on how you use your benefit.

Critical Illness Insurance (Credit Insurance)

coverage that provides a lump-sum payment should you become seriously ill with a specified illness. The payment is made to your creditors to pay off your debt owing.

Death Benefit

amount paid on death of an insured.

Debt (Credit Insurance)

Money, goods or services that someone is obligated to pay someone else in accordance with an expressed or implied agreement. Debt may or may not be secured.

Disability Insurance (Credit Insurance)

Group Insurance designed to cover monthly obligations due to a borrower being unable to work due to sickness or injury.

Dividend

Unlike dividends which are paid to company shareholders, participating Insurance policy dividends are not based on the company's overall profits. Rather, they are determined by grouping policies by type and country of issue and looking at how Each class contributes to the company's earnings and surplus.

Dividend Policy

This policy governs Canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class.

Equity-based insurance

Life Insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio.

Equity investment

Through equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.

Guaranteed Interest Annuity (GIA)

Interest bearing investment with fixed rate and term.

Guaranteed Interest Certificate (GIC)

Interest bearing investment with fixed rate and term.

Guaranteed Renewal

A promise that a Life Insurance policy will be renewed without penalty or medical examination after the term has expired. The renewal rate can also be guaranteed.

Individual Insurance

Insurance that is offered to individuals rather than groups.

Insurance Act

In Canada, a general statute that contains most of the Insurance law of a common law province, and regulates the conduct of insurers and Insurance agents within the province.

Insurance Policy (Credit Insurance)

A policy under which the Insurance company promises to pay a benefit of the person who is insured.

Insured

person whose Life is protected under a specific policy.

Interest Option

One of several investment accounts in which your premiums may be invested within your Life Insurance policy.

Interest Rate

Rate charged or paid for the use of money, normally expressed as a percentage

Irrevocable Beneficiary

legal designation that cannot be contested. (See beneficiary)

Issue

when an item is approved and released for sale, or when a policy or sales contract is accepted.

Issue Age

Age of an insured as at the policy issue date, using "age nearest" next birthday formula.

Issue Date

date on which a policy is approved.

Job Loss Insurance (Credit Insurance)

coverage that can pay down your debt should you become involuntarily unemployed. The payment is made to your creditors to reduce your debt owing.

Joint Policy Life

One Insurance policy that covers two lives, and generally provides for payment at the time of the first insured's death. It could also be structured to pay on second death basis for estate planning purposes.

Lease (Credit Insurance)

contract granting use of real estate, equipment or other fixed assets for a specified period of time in exchange for payment. The owner or a leased property is the lessor and the user the lessee.

Lender (Credit Insurance)

individual or firm that extends money to a borrower with the expectation of being repaid, usually with Interest. Lenders create debt in the form of loans. Lenders include financial institutions, leasing companies government lending agencies and automobile dealers.

Life Insurance

Insurance that provides protection against an economic loss caused by death of the person insured.

Life Insurance (Credit Insurance)

Group Term Life Insurance that pays or reduces the balance due on a loan if the borrower dies before the loan is repaid.

Life Insured

The person who's Life is protected by an individual policy.

Life Underwriter

Insurance Agent.

Mortgage Life insurance (Credit Insurance)

Decreasing term Life Insurance that provides a death benefit amount corresponding to the decreasing amount owed on a mortgage.

Mortgage (Credit Insurance)

An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for purposes of purchasing a loan secured by a home.

Non-participating Policy

A type of Insurance policy or annuity in which the owner does not receive dividends.

Paid-Up Additions

A type of Insurance policy or annuity in which the owner receives dividends, typically increases the death.

Participating Policy

A policy offers the potential of sharing in the success of an Insurance company through the receipt of dividends.

Personal Line of credit (Credit Insurance)

A bank's commitment to make loans to a borrower up to a specified maximum during a specific period, usually one year.

Policy

A written document that serves as evidence of Insurance coverage and contains pertinent information about the benefits, coverage and owner, as well as its associated directives and obligations.

Policy Anniversary

Yearly event linked to a policy. Usually the date issued.

Policy Date

date on which the Insurance company assumes responsibilities for the obligations outlined in a policy.

Policy Fee

Administrative charge included in a policy Premium.

Policy Year

Period between two policy anniversaries.

Policyowner

The person who owns and holds all rights under the policy, including the power to name and change beneficiaries, make a policy loan, assign the policy to a financial institution as collateral for a loan, withdraw funds or surrender the policy.

Pre-existing medical condition (Credit Insurance)

A medical condition that existed before you became insured. Most policies exclude benefits if the condition is related to the event that triggers a claim if occurs within a certain period (6-12 months) after you became insured.

Preferred Beneficiary

Used in older contracts to confer the same rights as an irrevocable beneficiary. Applied to family members.

Premium (Credit Insurance)

Annual or monthly amounts payable, by a client, for a selected Insurance coverage to insure debt obligations to their creditors are protected.

Refinancing (Credit Insurance)

Extending the maturity date or increasing the amount of existing debt or both. also, revising a payment schedule, usually to reduce the monthly payments and often to modify Interest charges.

Reinsurance

Process in which the risk of potential loss is shared between two or more insurers.

Strike Insurance (Credit Insurance)

coverage that can pay down your debt should you become unemployed due to a legal strike in your place of work. The payment is made to your creditors to reduce your debt owing.

Surrender

Give up certain rights under a policy, or give up the policy itself.

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